Revenue Procedure 2023-39 was released on August 23, 2023, by the IRS, announcing the contribution percentage for 2024. This percentage determines the affordability of an employer’s plan under the Affordable Care Act (ACA). Shared responsibility, or pay or play rules, require applicable large employers (ALEs) to offer affordable health coverage to full-time employees and their dependents or receive a fine.
For plan years beginning in 2024, employer-sponsored coverage will be considered affordable under the ACA so long as the employee’s required contribution does not exceed 8.39% of their yearly household income.
This decrease is significant and is the lowest percentage ever set for the ACA’s pay or play rules. Employers may be required to lower the amount that their employees contribute for 2024 in order to comply with the percentage decrease.
Affordability Contribution Percentages
In 2024, employer-sponsored coverage will be deemed affordable if the employer’s required contribution for self-only coverage does not surpass 8.39% of the employee’s household income for the year regarding the pay or play rules and premium tax credit eligibility.
The 2023 pay or play percentage, 9.12%, went down from 9.61% in 2022, which, until this upcoming year, was the largest decrease since the rules were implemented.
For more information on the affordability contribution changes, please contact your dedicated Creative Benefits, Inc. team member.